The US economy is undergoing a robust recovery and US corporate earnings and revenues are set to increase. Is this overly optimistic? This is the view of CFOs in the US who are more confident about their prospects than at any point in the last year.
Three-quarters of CFOs are more optimistic about the economy for this quarter than for the last quarter, reflected by stronger expectations over GDP growth, with average predictions of 2.9% over the next year.
Eighty-five per cent of CFOs expect corporate earnings to increase with an average expected growth of 16.9% over the next year; 87% of corporates also believe their revenues will grow.
“CFOs are out in front of what is happening in the company and play a key role in investment decisions – capital spending and people,” says Colleen Sayther, president and CEO of Financial Executives International (FEI). “Hopefully, this cautious optimism is a catalyst for new investment.”
Capital spending, according to the survey, is set to increase by 9% this year – for the same quarter last year this figure stood at only 1.5%. Technology outlay will also increase by 4.9% over the next year, compared to the 2.2% expected increase for the previous quarter.
John Graham, a finance professor at Duke University (US), comments: “Capital spending, more than any other corporate activity, will lift the economy. Over the last several quarters, CFOs’ optimism has wavered as they predicted only modest gains in spending. We think this quarter’s increased optimism, in tandem with increased spending expectations, is a strong sign for continued economic growth.”
The CFO Outlook Survey, carried out by the FEI and Duke University, interviewed 181 CFOs of both public and private US corporates.
